Temporary Customs Waivers are Simplifying Import-Export TradeARTICLE

By Elena Malykhina

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Conducting business worldwide often involves exporting and importing goods for a short period of time – whether it’s for trade shows, sales demonstrations, or related activities. The process can be long and expensive due to customs procedures, as well as additional fees and taxes. But there is an easier, less costly way – about which many businesses conducting international trade remain unaware: temporary customs waivers. Officially known as ATA Carnets, these can be used to bring certain goods into a country temporarily, without the usual formalities of import-export trade.

ATA Carnet Rules for Temporary Export-Import Trade Purposes

An ATA Carnet allows a business or an individual conducting import-export trade to use a single document for clearing certain categories of goods through customs in different countries. The document is accepted in 86 countries and territories, with additional countries – including Qatar, Trinidad and Tobago, and Saudi Arabia – soon to join the list.1 This type of “merchandise passport” applies to goods that will return to the country of origin within 12 months of the export date.

A wide variety of import-export goods can be covered by ATA Carnets, as long as they are not consumable or perishable.2 The U.S., for example, allows short-term importation of commercial samples, professional equipment, and certain advertising materials. Other countries permit the use of an ATA Carnet to import goods such as computers, industrial machinery, automobiles, jewelry, and apparel. In some cases even extraordinary items like famous paintings, circus animals, and satellites can be covered.3

Another benefit of using ATA Carnets is not having to pay a value-added tax (VAT) for the goods, which can be imported and exported an unlimited number of times during a one-year period.4 ATA Carnets are an efficient option for temporary export and import of trade goods because they can be processed within 24 hours.

There are more than 178,000 ATA Carnets issued annually, covering import-export goods valued at approximately $30 billion.5 American companies used over 20,000 ATA Carnets for the temporary export of various types of goods in 2016, which is a sign of continued growth in U.S. exports, Peter M. Robinson, president and CEO of the U.S. Council for International Business (USCIB), said in an early 2017 press release.6 ATA Carnet usage by American import-export businesses often indicates increased sales overseas, Robinson said.

USCIB administers and guarantees ATA Carnets in the U.S. and serves as the American national committee for the International Chamber of Commerce (ICC). ICC oversees the worldwide ATA Carnet system, together with the World Customs Organization.7

ATA Carnets are not free for import-export companies, however. The USCIB requires that all U.S. ATA Carnets be financially secured either through a surety bond (carnet bond) or a certified check, usually for 40 percent of the shipment value. This guarantees payment of duties and taxes to customs if an ATA Carnet is misused.8 There are also processing fees – anywhere between $200 and $500 –determined by the general list value of the goods. For example, a fee of $385 is charged for goods valued from $150,000 to $400,000.9 The fees include ATA Carnet documents and several sets of certificates, depending on the number of trips involved.

Alternatives to ATA Carnets

There are alternatives available to those who wish to temporarily export goods without using ATA Carnets. The alternatives, however, are not as easily attained as ATA Carnets and may still involve some fees.

One option is to get a Temporary Importation Under Bond (TIB), which allows the entry of goods into a country for a limited time free of duty. Instead of duty, the importer must post a bond for twice the amount of duty and taxes that would otherwise be owed on the importation. If a business or individual agrees to this procedure, they must export or destroy the merchandise within a specific timeframe or pay liquidated damages – often twice the normal duty.10 The process can get quite complex and there are restrictions on the types of items that can be entered as a TIB. With an ATA Carnet, documents are issued prior to departure; with a TIB, however, import documents are prepared and filed at the time of foreign entry. This means TIBs must be obtained at the time of entry into each foreign territory and must meet their customs requirements. In some cases, a broker may need to be hired to clear the goods through customs.

Another option is “duty drawback,” where an exporter deposits the necessary taxes and duties with foreign customs, then files additional paperwork at the time of re-exportation to receive a refund. The reimbursement typically happens months later and is made in the country’s local currency, not U.S. dollars. The duties and taxes can range from 20 to 30 percent in Europe, or up to 40 percent in China.11 All of these factors make entry with duty drawback a less economical option than ATA Carnets

The Takeaway

Businesses conducting import-export trade can benefit from using ATA Carnets when temporarily importing and exporting goods overseas. This single document can simplify customs procedures, allow advanced planning, and carries a predetermined known cost. ATA Carnet usage is growing all over the world.

The Author

Elena Malykhina

Elena Malykhina is professional writer who has covered science, technology and business for more than 10 years. Her work has appeared in InformationWeek, Scientific American, Newsday, The Wall Street Journal and Adweek, as well as through the Associated Press.

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